Mаrgaret Doe, Appellant, v. Bloomberg, L.P., et al., Defendants, Michael Bloomberg, Respondent.
No. 8
State of New York Court of Appeals
OPINION This opinion is uncorrected and subject to revision before publication in the New York Reports.
Elise M. Bloom, for respondent.
National Employment Lawyers Association-New York, Partnership for New York City, amici curiae.
GARCIA, J.:
Plaintiff, an employee of Bloomberg L.P. using the pseudonym “Margaret Doe,” brought suit against defendants Bloomberg L.P., her supervisor Nicholas Ferris, and Michael Bloomberg, asserting several causes of action arising from alleged discrimination,
I.
Plaintiff‘s complaint asserted various causes of action, including sex discrimination and hostile work environment claims under the City HRL.1 Plaintiff alleged that Ferris, her direct supervisor at Bloomberg L.P., engaged in a continuous pattern of sexual harassment, including rape. She alleged that Bloomberg, in addition to Bloomberg L.P., was her “employer” and as a result was subject to vicarious liability under the City HRL. Plaintiff asserted that “[a]t all relevant times” Bloomberg was the “Co-Founder, Chief Executive Officer, and President of Bloomberg[ L.P.],” and that he had fostered an environment that accepted and encouraged “sexist and sexually-charged behavior.” She does not claim that Bloomberg had any “personal participation” in the specific offending conduct.
II.
“When reviewing a defendant‘s motion to dismiss a complaint for failure to state a cause of action, a court must give the complaint a liberal construction, accept the allegations as true and provide plaintiffs with the benefit of every favorable inference” (Cortlandt St. Recovery Corp. v Bonderman, 31 NY3d 30, 38 [2018] [internal quotation marks omitted]). The ultimate question is whether, accepting the allegations and affording these inferences, “plaintiff can succeed upon any reasonable view of the facts stated” (Aristy-Farer v State of New York, 29 NY3d 501, 509 [2017] [internal quotation marks omitted]). Applying this standard, we conclude that the claims against Bloomberg must be dismissed, but our reasoning differs from that of the courts below.
A.
The City HRL makes it unlawful for “an employer or an employee or agent thereof” to discriminate on the basis of gender (
“An employer shall be liable for an unlawful discriminatory practice based upon the conduct of an employee or agent which is in violation of subdivision one or two of this section only where:
“(1) the employee or agent exercised managerial or supervisory responsibility; or
“(2) the employer knew of the employee‘s or agent‘s discriminatory conduct, and acquiesced in such conduct or failed to take immediate and appropriate corrective action; an employer shall be deemed to have knowledge of an employee‘s or agent‘s discriminatory conduct where that conduct was known by another employee or agent who exercised managerial or supervisory responsibility; or
“(3) the employer should have known of the employee‘s or agent‘s discriminatory conduct and failed to exercise reasonable diligence to prevent such discriminatory conduct” (
Administrative Code of City of NY § 8-107 [13] [b] ).
The statute is clear as to when an employer is liable: for the employer‘s own offending conduct and vicariously for some actions of others. But the term “employer” is undefined, generating confusion as courts have endeavored to determine who is an employer in the context of the extensive—and at times strict—liability imposed.
B.
We do not find persuasive the analysis adоpted by the Appellate Division majority. That court held that “some participation in the specific conduct committed against the plaintiff is required to hold an individual owner or officer of a corporate employer personally liable in his or her capacity as an employer” (178 AD3d at 50). Because plaintiff failed to allege that Bloomberg “encouraged, condoned or approved of the specific
The Appellate Division majority‘s test is derived from our case law interpreting the New York State Human Rights Law (
Nonetheless, some courts have applied the State HRL‘s culpability standard to determine whether individuals are employers under the City HRL because of their relationship to the business entity employing the perpetrator of the offending conduct (see Boyce v Gumley-Haft, Inc., 82 AD3d 491, 492 [1st Dept 2011] [defendant who was the 50% owner of an LLC with the power to hire and fire employees, could be held liable as an employer under section 8-107 (13) (b) provided that “he encouraged, condoned or approved (the) alleged discriminatory conduct“]; McRedmond v Sutton Place Rest. & Bar, Inc., 95 AD3d 671, 673 [1st Dept 2012] [the general manager of a restaurant “can be held liable (under the State HRL) as an employer if, as the record suggests, hе had the authority to do more than carry out personnel decisions and he ... participated in the conduct (and) (f)or the same reasons, (he) may also be held liable under the City HRL“]). However, the Totem Taxi test for determining whether an employer is liable under the State HRL has no application in determining who is an employer for purposes of the City HRL.
The test proposed by the dissent below, purportedly drawn from our decision in Patrowich v Chemical Bank (63 NY2d 541 [1984]), is even less suitable. According to the dissent an individual qualifies as an employer under the City HRL when shown to have either (1) an ownership interest in the organization or (2) the power to do more than carry
In Patrowich, the Court considered whether a corporate officer or employee could be an “employer” subject to liability under the State HRL and
“A corporate employee, though he has a title as an officer and is the manager or supervisor of a corporate division, is not individually subject to suit with respect to discrimination based on age or sex under New York‘s Human Rights Law or its Labor Law or under the Federal Age Discrimination in Employment Act or Equal Pay Act if he is not shown to have any ownership interest or any power to do more than carry out personnel decisions made by others” (63 NY2d at 542 [citations omitted]).
The dissent below, the dissent here, and a number of other courts, misinterpret Patrowich as making the “ownership/personnel decisions” test relevant to defining “employer” in each of the state and federal statutes at issue, including the State HRL (see e.g. Matter of New York State Div. of Human Rights v ABS Elecs., Inc., 102 AD3d 967, 969 [2d Dept 2013]; Barbato v Bowden, 63 AD3d 1580, 1581 [4th Dept 2009]; Pepler v Coyne, 33 AD3d 434, 435 [1st Dept 2006]; Strauss v New York State Dept. of Educ., 26 AD3d 67, 72 [3d Dept 2005]; Hafez v Avis Rent A Car Sys., Inc., 242 F3d 365 [2d Cir 2000]).
Patrowich, however, applied two different standards, one to the state laws and one to the federal statutes at issue: “A corporate employee, though [the employee] has a title as an officer and is the manager or supervisor of a corporate division, [1] is not individually subject to suit with respect to discrimination based on age or sex under New York‘s Human Rights Law or its Labor Law” and “[2] is not individually subject to suit with respect to
We contrasted this narrow meaning of “employer” under the State HRL with the definitions of that same term found in the two federal statutes at issue, under which, according to the Court, “[t]he question [was] a closer one” (id.). Those statutes broadly defined an employer as “any person acting directly or indirectly in the interest of an employer in relation to an employee” and as “a person engaged in an industry affecting commerce [and] any agent of such person” (id.). Nevertheless, this expansive language required some limitation, and the Court concluded that “the weight of Federal authority is that ‘economic reality’ governs who may be sued under both [federal] statutes, and that a corporate employee ... who ... has not been shown to have any ownership interest or
In Patrowich, it is clear that this Court distinguished between (1) the state statutes, under which a corporate employee simply does not qualify as an “employer,” regardless of the employee‘s position or relationship to the employer, and (2) the federal statutes, under which, according to “Federal authority,” individual employees may be subject to suit as “employers” if shown to have an ownership interest or power to do more than carry out personnel decisions made by others.2 Of course, Patrowich did not examine the meaning of “employers” pursuant to the City HRL, and we address it here only in light of the City Council‘s directive that “similarly worded provisions of federal and state civil rights laws [should be viewed] as a floor below which the City‘s Human Rights law cannot fall” (Local Law No. 85 [2005] of City of NY § 1).
The language in the City HRL, like that found in the State HRL, is itself circumscribed and requires no external limiting principle exempting employees from individual suit as employers. Instead, where a plaintiff‘s employer is a business entity, the shareholders, agents, limited partners, and employees of that entity are not employers within the meaning of the City HRL. Rather, those individuals may incur liability only for their own discriminatory conduct, for aiding and abetting such conduct by others, or for retaliation against protected conduct (
The City HRL specifically imposes primary liability on employees and agents for some discriminatory acts (see e.g.
Indeed, employees and agents of a company are not ordinarily understood to be “employers,” and are not normally subject to vicarious liability for the wrongs of corporate employees. Rather, an employee is “[s]omeone who works in the service of another person (the employer)” (Black‘s Law Dictionary [11th ed 2019], employee). “The principle that respondeat superior is a form of secondary liability that cannot be imposed upon the fellow employeе of a wrongdoer is certainly well-defined and explicit in New York” (Hardy v Walsh Manning Sec., L.L.C., 341 F3d 126, 130 [2d Cir 2003]). Similarly, although possessing more power to act on the corporation‘s behalf, an agent is “[s]omeone who is authorized to act for or in place of another” (Black‘s Law Dictionary [11th ed 2019], agent) and a “corporate agent” is an agent “authorized to act on behalf of a corporation; broadly, all employees and officers who have the power to bind the corporation” (Black‘s Law Dictionary [11th ed 2019], corporate agent). Though the common law imposes vicarious liability on the corporation for torts of its employees and agents committed within the scope
Shareholders are also not commonly understood to be employers, and to designate them as such for the purpose of imposing vicarious liability would go against the principles underlying the legal distinction. “The law permits the incorporation of a business for the very purpose of enabling its proprietors to escape personal liability” (Walkovszky v Carlton, 18 NY2d 414, 417 [1966]).
“As a general rule, the law treats corporations as having an existence separate and distinct from that of their shareholders and consequently, will not imрose liability upon shareholders for the acts of the corporation. Indeed, the avoidance of personal liability for obligations incurred by a business enterprise is one of the fundamental purposes of doing business in the corporate form” (Billy v Consolidated Mach. Tool Corp., 51 NY2d 152, 163 [1980]).
Accordingly, at common law, shareholders are not subject to vicarious liability for the torts of a corporation‘s agents or employees (Connell, 83 AD2d at 58). The text of the City HRL demonstrates no intent to displace these settled legal principles.3 Nor is there merit to the dissent‘s suggestion that the structure of the employer-business at issue here, a
Our conclusion does not run afoul of the City Council‘s instruction that “similarly worded provisions of federal and state civil rights laws [are] a floor below which the City‘s Human Rights law cannot fall, rather than a ceiling above which the local law cannot rise” (Local Law No. 85 [2005] of City of NY § 1). The liability imposed on employers by thе City HRL is substantially broader than that provided by its state counterpart, and as a result it is not necessary to distort the ordinary meaning of the term “employer” to accomplish the goal of the City Council‘s interpretive guidance. Moreover, the federal statutes plaintiff cites as supporting a broader definition are not “similarly worded” (see Patrowich, 63 NY2d at 543 [describing broader language of Equal Pay Act and Age Discrimination Act]; supra n 3 [discussing broad language of FLSA]). The unique provisions of the City HRL provide for broad vicarious liability for employers but that liability does not extend to individual owners, officers, employees, or agents of a business entity.
The dissent advocates for a contrary result based solely on Albunio‘s rule of construction that the City HRL be interpreted “broadly in favor of discrimination plaintiffs,
IV.
Applying our rule to the present case, plaintiff has failed to allege that Bloomberg is her employer for purposes of liability under the City HRL. Her allegations concerning his position at the company demonstrate only that he is an owner or officer of Bloomberg
Accordingly, the order of the Appellate Division should be affirmed, with costs.
The New York City Human Rights Law (NYCHRL) is “the most progressive in the nation and reaffirms New York‘s traditional leadership in civil rights” (Comm. on General Welfare, Committee Report [Aug. 17, 2005] at 2, quoting Mayor David Dinkins, available
That rule of construction is dispositive in this appeal, in which we consider whether defendant Michael Bloomberg is an employer of those who work for Bloomberg L.P., the company that he built and that bears his name. The NYCHRL does not expressly limit “employer” to a business entity or exclude business owners from employer status. To the contrary, the statutory text and remedial scheme suggest the legislature‘s intent for a broad and flexible definition of “employer,” in line with the public policy undergirding the NYCHRL. In that vein, the NYCHRL applies generally to businesses with as few as four employees and subjеcts employers to liability for their own discriminatory conduct and that of their supervisors (see
The majority repeats the errors of the past, retreats from our mandate, and narrowly construes the NYCHRL to adopt a per se rule that favors corporate defendants. Applying its new rule, the majority concludes that this defendant is not an employer, notwithstanding his commanding role in the company. This interpretation of the statute is untenable, and so I dissent.
I.
The New York City Human Rights Law was born of the City Council‘s recognition that “there is no greater danger to the health, morals, safety and welfare of the city and its inhabitants than the existence of groups prejudiced against one another and antagonistic to each other because of their actual or perceived differences” (
This approach drew the ire of the New York City Council and high-ranking city officials. In explaining the 1991 amendments to the NYCHRL, then-Mayor David Dinkins specifically mentioned the Court‘s holding in Totem Taxi as a motivation for expanding the anti-discrimination protections available under the City‘s law:
“Even on the state level, narrow interpretations of civil rights laws have retarded progress. For example, the State Court of Appeals has made it virtually impossible to hold taxi companies responsible for the discriminatory acts committed by their drivers. There is, therefore, no incentive for these companies to curb bias on the part of their drivers, and persons of color still routinely face difficulty in getting a cab to take us where we want to go” (Mayor David N. Dinkins, Remarks by Mayor David N. Dinkins at Public Hearing on Local Laws [Jun. 18, 1991], available at http://www.antibiaslaw.com/sites/default/files/all/LL39LegHist-Mayor.pdf [last accessed Jan. 15, 2021]).3
Despite the intent of the City Council, this Court continued to ignore textual and historical support for independent consideration of the NYCHRL and applied “rote parallelism” which merely tracked contemporary analysis under the NYSHRL and Title VII, the federal employment anti-discrimination analog. Frustrated with this interpretive approach, the City Council enacted the Local Civil Rights Restoration Act (LCRRA) in 2005. The LCRRA was intended “to clarify the scope” of the NYCHRL because
“[i]t is the sense of the Council that New York City‘s Human Rights Law has been construed too narrowly to ensure protection of the civil rights of all persons covered by the law. In particular, through passage of this local law, the Council seeks to underscore that the provisions of New York City‘s Human Rights Law are to be construed independently from similar or identical provisions of New York state or federal statutes” (
NYC Local Law No. 85 of 2005 ).
Interpretations of New York statе or federal statutes with similar wording may be used to aid in interpretation of the New York City Human Rights Law, viewing similarly worded provisions of federal and state civil rights laws as a floor below which the City‘s Human Rights law cannot fall, rather than a ceiling above which the local law cannot rise” (id. [emphasis added]).
To further emphasize the Council‘s intent that courts employ an independent and robust analysis of the NYCHRL, the LCRRA amended the section titled “Construction” to declare that “[t]he provisions of this title shall be construed liberally for the accomplishment of the uniquely broad and remedial purposes thereof, regardless of whether federal or New York state civil and human rights laws, including those laws with provisions worded comparably to provisions of this title, have so been construed” (
When the law was amended in 2005, this Court was again singled out for its failure to give the NYCHRL the liberal, far-reaching application intended by the Council. The Committee on General Welfare‘s report on the proposed legislation, for example, specifically cited McGrath v Toys “R” Us, Inc. (3 NY3d 421 [2004]) as one of several “recent judicial decisions [which] underscore the need to clarify the breadth of protections afforded by New York City‘s human rights law” (Comm. on General Welfare, Committee Report [Aug. 17, 2005] at 4, available at
In McGrath, the Court determined that broad statements regarding the intended liberal construction of the NYCHRL were insuffiсient to justify interpreting the law more broadly than its state counterpart—a holding the City Council explicitly rejected in enacting the 2005 amendments (see Annabel Palma, Statement at the Meeting of the New York City Council 41-42 [Sept. 15, 2005] [“Insisting that our local law be interpreted broadly and independently will safeguard New Yorkers at a time when . . . state civil rights protections are in jeopardy. There are many illustrations of cases, like . . . McGrath and Forrest v Jewish Guild for the Blind, 3 NY3d 295 [2004]) that have either failed to interpret the City Human Rights Law to fulfill its uniquely broad purposes, ignore the text of specific provisions of the law, or both“]).5
Following the 2005 amendments, it appeared that the Court understood this clear expression of legislative intent. In Albunio, the Court unanimously declared that, in accordance with the LCRRA, we “must construe . . . the City‘s Human Rights Law[] broadly in favor of discrimination plaintiffs, to the extent that such a construction is
II.
Plaintiff, under the pseudonym Margaret Doe,6 filed the underlying complaint alleging violations of the NYCHRL for gender discrimination at her workplace, Bloomberg L.P., a limited partnership. She averred that she was 22 and had just graduated college when she commenced her first professional job at Bloomberg L.P. Shortly after starting and continuing for the next three years she worked in a hostile work environment where her supervisor, Nicholas Ferris, relentlessly sexually harassed her and on two occasions raped her. She further averred that, due to the toxic work environment and the harm she suffered as an employee, she was forced to take indefinite medical leave.
Plaintiff further alleges that the corporate culture at Bloomberg L.P. was deeply misogynist, and female employees were regularly sexually objectified and subjected to comments regarding their physical appearance. Plaintiff maintains that this sexist and sexually charged behavior was known and encouraged by Bloomberg himself, and that he was a defendant in another lawsuit charging him and several managers with sexist behavior. She alleges that Bloomberg L.P.‘s human resources department was notoriously indifferent towards the sexual harassment complaints of lower-level female employees and lax in its enforcement of policies meant to prevent sex discrimination and harassment. Plaintiff further maintains this was indicative of a “top-down culture that is blatantly hostile
Bloomberg moved to dismiss the complaint against him in its entirety for failure to state a cause of action, arguing that he was not an “employer” within the meaning of the NYCHRL. Upon reargument the court held that plaintiff sufficiently stated claims against Bloomberg as an employer.
On appeal, a divided Appellate Division reversed, holding that plaintiff had failed to allege that Bloomberg qualified as her employer under the NYCHRL because she failed to allege that he encouraged, condoned, or approved the specific conduct which gave rise to the claim (Doe v Bloomberg, 178 AD3d 44, 50-51 [1st Dept 2019]). The majority explained that the NYCHRL could not be read to impose strict liability on any individual holding an ownership stake or leadership position in a company, because doing so would increase the number of individuals who could be held strictly liable and would hold vicariously liable any individual owner or high-ranking executive of any corporation in New York City, in contravention of the principles underlying New York corporate law. The dissenting justices argued that the majority disregarded the plain wording of the NYCHRL detailing when an employer is strictly liable for the discriminatory conduct of its employees and agents and the general judicial principle that anti-discrimination laws should be liberally construed.
III.
On a motion to dismiss pursuant to
Assuming the facts alleged about Bloomberg‘s role vis-à-vis Bloomberg L.P., the next step is to consider whether he is an “employer” for purposes of the NYCHRL. I agree with the majority that the Appellate Division‘s reasoning is erroneous. Indeed, as one of the principal drafters of the amendments to the NYCHRL has explained, “Section 8-107 (13) (b) (1) imposes no requirement that the employer encourage, condonе, or acquiesce in the conduct,” because the Council sought to impose strict liability on employers (Craig Gurian, A Return to Eyes on the Prize: Litigating Under the Restored New York City Human Rights Law, 33 Fordham Urb L J 255, 270-271; 270 n 66 [2006]). Rather, whether a party is an “employer” for purposes of the NYCHRL turns on their relationship to the plaintiff and the workplace. In other words, the starting point is not whether a party will be strictly liable for the actions of another; the measure of liability is the end point, to be considered after the party is established to be an employer. That is where our agreement ends because the majority essentially replicates this flaw in its analysis and adopts an overly narrow rule that undermines the purpose of the NYCHRL. The majority concludes that because plaintiff worked for a business entity, vicarious liability can only be imposed
The majority incorrectly assumes that principles of corporate liability resolve the questions presented on this apрeal. The business here, however, is a limited partnership, which, under New York law, passes some personal risks onto the business‘s partners, and defendant allegedly occupies a commanding role in the company (see e.g. Ederer v Gursky, 9 NY3d 514, 522 [2007] [“Just as a principal is liable for the acts of its agents, each partner is personally responsible for the acts of other partners in the ordinary course of the partnership‘s business“]). The majority insists that the difference between a corporation and a limited partnership is irrelevant and that, in any event, partners in limited partnerships would not face liability on the facts presented on this appeal. This is incorrect; even limited partners will become liable as general partners when they “take[] part in the control of the business” (
The parties dispute the definition of “employer” as it relates to
“An employer shall be liable for an unlawful discriminatory practice based upon the conduct of an employee or agent . . . only where: (1) The employee or agent exercised managerial or supervisory responsibility; or (2) The employer knew of the employee‘s or agent‘s discriminatory conduct, and acquiesced in such conduct or failed to take immediate and appropriate corrective action; an employer shall be deemed to have knowledge of an employee‘s or agent‘s discriminatory conduct where that conduct was known by another employee or agent who exercised managerial or supervisory responsibility; or (3) The employer should have known of the employee‘s or agent‘s discriminatory conduct and failed to exercise reasonable diligence to prevent such discriminatory conduct” (
Administrative Code § 8-107 [13] [b] ).
“the term ‘employer’ does not include any employer that has fewer than four persons in the employ of such employer at all times during the period beginning twelve months before the start of an unlawful discriminatory practice and continuing through the end of such unlawful discriminatory practice, provided however, that in an action for unlawful discriminatory practice based on a claim of gender-based harassment pursuant to subdivision one of section 8-107, the term ‘employer’ shall include any employer, including those with fewer than four persons in their employ. For purposes of this definition, (i) natural persons working as independent contractors in furtherance of an employer‘s business enterprise shall be counted as persons in the employ of such employer and (ii) the employer‘s parent, spouse, domestic partner or child if employed by the employer are included as in the employ of such employer” (
Administrative Code § 8-102 ).
The NYCHRL contains no further explication of what constitutes an employer, except by differentiation and implication. The NYCHRL distinguishes employer from various subordinate actors, namely “employee,” “agent,” an employee or agent who exercises “managerial or supervisory responsibility,” “independent contractor,” and “intern” (id.).
Bloomberg does not fall within any of these defined categories of actors. He is not a subordinate; he was at all relevant times and remains the majority owner, president, CEO, and co-founder of the business that bears his name. Further, plaintiff alleges that, from his high-level position, he fostered the sexist culture that created the sexually hostile workplace she joined, thereby connecting him to the alleged conduct of defendant Ferris. It takes no great leap of logic to conclude that the owner of a business is the employer of those who work for the business. This is why, for instance, the Appellate Division rightly noted that a sole proprietor is an employer for purposes of the NYCHRL (Bloomberg, 178 AD3d at 47-48). Nothing in the NYCHRL limits the definition of employer, as applied to an individual, to a sole proprietor. And it is logical to treat an individual with control over the business as an employer in fact, if not in name—particularly given the liability faced by low-level supervisors and managers for their discriminatory conduct. It is, of course, eminently reasonable to hold individuals personally liable for their own discriminatory acts. But it beggars belief that this company‘s owner—alleged to have fostered a pernicious culture of misogyny that facilitated the egregious conduct to which plaintiff was subjected—should nonetheless escape liability by virtue of his position at the top of the company hierarchy.
Indeed, this commonsensical conclusion is clear from our recent decision in Griffin v Sirva, Inc. (29 NY3d 174 [2017]). While I agree with the majority that Griffin is not directly on point (majority op at 9 n 2), that case nonetheless elucidates an important
The Court‘s prior decision in Patrowich v Chemical Bank (63 NY2d 541 [1984]) is also instructive. In Patrowich we held that,
“[a] corporate employee, though [such employee] has a title as an officer and is the manager or supervisor of a corporate division, is not individually subject to suit with respect to discrimination based on age or sex under New York‘s Human Rights Law or its Labor Law or under the Federal Age Discrimination in Employment Act or Equal Pay Act if [the employee] is not shown to have any ownership interest or any power to do more than carry out personnel decisions made by others” (id. at 542 [citations omitted]).
In other words, a corporate employee—including CEOs like defendant—will not be held liable as an employer under the NYSHRL unless “shown to have . . . [an] ownership interest or . . . power to do more than carry out personnel decisions made by others” (id. ).10
The majority asserts that this plain language is, actually, quite muddled. Apparently, what the Court meant to say is that a corporate employee is not individually subject to suit under the NYSHRL or the
Notably, Patrowich was the law when the Council amended the NYCHRL in 1991 and 2005. By that time, lower courts had understood the case to stand for the same proposition that I do—that a party will be held vicariously liable when “shown to have . . . [an] ownership interest оr . . . [the] power to do more than carry out personnel decisions made by others” (id. at 542). We must assume the Council was aware of the state of the law when it amended the NYCHRL (see People ex rel. Postal Tel.-Cable Co. v State Bd. of Tax Commrs., 224 NY 167, 183 [1918]; see also People ex rel. Sibley v Sheppard, 54 NY2d 320, 325 [1981]; Easley v New York State Thruway Auth., 1 NY2d 374, 379 [1956] [“Legislatures are presumed to know what statutes are on the books“]). Yet, the Council never sought to limit strict liability to the business entity rather than its owners or high-level executives. To the contrary, with each amendment it expanded liability. Indeed, it added employer vicarious liability as part of the 1991 amendments. That is a long time to allow an erroneous interpretation to go uncorrected, especially if, as the majority claims, the interpretation violates tenets of corporate and agency law meant to protect those same actors from liability.
Particularly telling is the fact that the New York State Division of Human Rights brought a number of anti-discrimination enforcement actions against owners and high-ranking employees, which various Appellate Divisions affirmed by citation to Patrowich (see e.g. Matter of State Div. of Human Rights v Steve‘s Pier One, Inc., 123 AD3d 728,
The majority may be correct in its implicit assumption that the state agency charged with enforcing the NYSHRL—as well as the courts which upheld that agency‘s determinations—were simply mistaken as to what Patrowich actually said. However, at a minimum, these decisions show that, for purposes of the NYSHRL, a definition of employer that reaches owners and high-ranking employees is a reasonable one. All the more so, then, would such an interpretation be reasonable under the NYCHRL, whose drafters made perfectly clear that the statute was to be interpreted more broadly than its state counterpart. Put another way, in accordance with the Council‘s directive, the NYSHRL is
The majority also suggests that the structure of the NYCHRL precludes finding high-ranking corporate employees and owners vicariously liable (majority op 10-11). But the subdivisions the majority invokes do no such thing. For instance, the fact that the “City HRL specifically imposes primary liability on employees and agents for some discriminatory acts” is irrelevant (id. at 10 [emphasis added]). The fact that individuals who directly participate in unlawful discrimination may face personal liability says precisely nothing about any vicarious liability they may also face. Thus, the majority‘s conclusion that the NYCHRL “conspicuously does not impose vicarious liability on these individuals under section 8-107 (13) (b)” is no more than question-begging (id.). Similarly, that
Lastly, the majority concludes that broad principles of corporate and agency law demonstrate that individual corporate employees and shareholders face no vicarious liability under the NYCHRL. As an initial matter, as I have discussed, Bloomberg L.P. is
The structure and legislative history of the NYCHRL make plain its purpose to impose liability broadly. The Council determined that accountability should not be limited to individual bad actors but also to those with controlling authority over those actors. This approach furthers the purpose of rooting out discrimination in all its forms by imposing liability on those who can most effectively bring about change. So, while a person is liable for their own discriminatory conduct (
Although the state legislature has expressly permitted vicarious liability in circumstances not dissimilar from those present in this appeal (see n 8 supra), the majority nonetheless insists that reading the NYCHRL to permit such vicarious liability would not be “reasonable” (majority op at 13-14). This misguided approach—predicated on the misapplication of corporate liability to a limitеd partnership—makes the majority‘s willingness to jettison the requirement of liberal construction in favor of discrimination plaintiffs all the more unsupportable. In any event, even if these “longstanding principles of corporate liability” applied here, it is plainly the intent of the New York City Council to displace those principles to achieve a society in which there is “no tolerance for discrimination in public life” (Report of the Committee on Civil Rights on Local Law 35 of 2016 at 8). Despite this and other unambiguous statements of legislative intent, the majority makes the startling claim that, “given [its] holding [it] need not address any potential conflict between the State statutes delineating corporate or agency liability and employer liability imposed by the City HRL” (majority op 12 n 3)—notwithstanding the fact that its holding only serves to exacerbate that conflict.
If owners and high-ranking employees wish to avoid strict liability, they simply need to bring their business into compliance with the NYCHRL and purge discrimination from their workplace. The Council sought to encourage such conduct both by imposing vicarious liability on employers and providing the opportunity for mitigation of liability with proof of diligent efforts to achieve a discrimination-free workplace (id.
Leadership starts at the top. Legal scholarship on workplace sexual harassment has long identified the “top-down” nature of discriminatory workplace cultures. Scholars have noted that CEOs play a powerful role in shaping workplace cultures, either hampering or fostering discriminatory behavior, even when they have not personally discriminated against an individual plaintiff:
“For men to behave more responsibly toward their female colleagues, they must work in a corporate culture that supports and affirms gender equity . . . . The chief executive officer (CEO) establishes that culture. Male employees and managers will adapt to the corporate culture in order to survive and succeed within that culture. It seems, therefore, that for companies to change, the men who work for them must change. The best way to inspire change among male executives, managers, and employees is to inspire change
among America‘s CEOs” (see Cheryl L. Wade, Transforming Discriminatory Corporate Cultures: This Is Not Just Women‘s Work, 65 Md L Rev 346, 347 [2006]).
In other words, ensuring that powerful individuals at the top of powerful companies face liability when their managers repeatedly harass and assault vulnerable employees provides the employer with exactly the sort of incentive to “curb bias” that Mayor Dinkins hoped the 1991 amendments to the NYCHRL would accomplish.
The recent emergence of the #MeToo movement laid bare the extent to which sexual harassment is common within business entities, where powerful company executives both tolerate and foster sexism in their ranks. For decades, businesses “would avoid liability by proliferating policies and offering trainings in cultures in which sexual harassment festered” (Amelia Miazad, Sex, Power, and Corporate Governance, 54 UC Davis L Rev [forthcoming 2021]). However, “#MeToo . . . exposed just how anemic sexual harassment training programs are” (id.). Male-dominated business cultures facilitate sexual harassment, and, recently, such cultures have become sources of concern for stakeholders (see e.g. Verified Derivative Compl. at 1-2, City of Monroe Emps.’ Ret. Sys. v Murdoch, No. 2017-0833 [Del. Ch. filed Nov. 20, 2017]; In re Signet Jewelers Ltd. Sec. Litig., No. 1:16-cv-06728-JMF [SDNY filed Mar. 22, 2018], at 61). As the legal scholarship suggests, these derivative actions have shifted the focus from mere compliance with sexual harassment training programs to accountability for high-ranking executives (see Miazad, Sex, Power, and Corporate Governance, 54 UC Davis L Rev). The majority bucks this welcomed trend, ignores clear legislative direction, and embraces an exceedingly narrow approach to the NYCHRL which would hold liable only those lower-ranking emрloyees
Assume the following hypothetical: A person who is the founder and sole owner of a business adopts a policy that no female shall be promoted to a managerial position. The owner then transforms the business into a limited partnership, and holds positions of majority owner, president, and CEO. The person subsequently leaves for another opportunity but retains status as an owner and appoints a successor as CEO. The policy of no female managers remains unchanged. A few years later, the person returns to the business and retakes the reins as CEO. The policy continues throughout this entire period, even as internal complaints increase and litigation ensues, challenging the policy. Under the majority‘s rule, a victim of the discriminatory policy cannot sue the architect of that policy for the actions of the managers and supervisors who effectuated that policy. That is the case even if the person holds a 99% ownership interest in the business. According to the majority, if this person structured the business in such a way as to shield themselves from individual liability for the company‘s debts, then they must also be shielded from liability for expressly promoting discrimination as well, regardless of their control of the workplace.13 That undermines the NYCHRL, which holds employers vicariously liable for the actions of supervisors.
In contrast, the interpretation I adopt ensures accountability from the top down. Owners cannot escape the consequences of the policies that they impose or the cultures that they foster within their businesses. Owners would thus diligently ensure full compliance with the NYCHRL, knowing that, if they did not, they would face vicarious liability for their supervisors’ actions.
V.
A majority of the Court has departed once more from our mandate to “construe . . . the [NYCHRL] broadly in favor of discrimination plaintiffs, to the extent that such a construction is reasonably possible” (Albunio, 16 NY3d at 477-478). As it did in McGrath, the majority rejects the plain language of the NYCHRL, declining—despite an expression of legislative intent that could hardly be clearer—to adopt the reasonable definition of employer that would be most favorable to discrimination plaintiffs. This error is particularly troubling because, unlike the McGrath Court, which did not have the benefit of the Court‘s opinion in Albunio, the majority today is entirely aware of our obligation to construe the statute in this way. Nonetheless, it refuses to do so.
A proper definition of “employer” would enforce the rule that every workplace—including those controlled by a limited partnership—is subject to the prohibitions of the NYCHRL. The NYCHRL holds owners accountable for discrimination and all employees
Ordеr affirmed, with costs. Opinion by Judge Garcia. Chief Judge DiFiore and Judges Stein, Fahey, Wilson and Feinman concur. Judge Rivera dissents in an opinion.
Decided February 11, 2021